Ooze Travels Fast
London deaths cause Wall Street to leak oil, sputter. Congo deaths? Who cares?
Oil reached a record high on Wall Street today and then plunged after the London blasts. And then it started rising again after word of a onrushing storm in the Gulf of Mexico.
Thank God another tragedy is on the way. Wouldn't want those hedge-fund operators and other well-dressed oil pirates to suffer just because some people got killed in a subway in London.
The crap shoot that is the world financial system is mostly driven, in the end, by hot air, as today's roller-coaster ride shows. Here's a Bloomberg News report from 1:08 p.m. EDT:
Crude oil reached a record $62.10 a barrel in New York and then plunged as terrorist bombs that killed at least 33 people in London raised the possibility of an economic slowdown. It was the biggest price swing in 14 years.
"Investors panicked on word of the attack and fled to quality, to gold, bonds and other safer harbors," said John Kilduff, vice president of risk management at Fimat USA in New York. "Prices are rebounding because there is a potential Category 3 storm in the Gulf."
And here's a Bloomberg report two hours later, from 3:17 p.m. EDT:
U.S. stocks rose, erasing their losses following terrorist attacks in London, on optimism the bombings will have little impact on the economy and profits.
"The market has an ability to support surprises because of the underlying resilience of earnings and the outlook to earnings," said Mario Gabelli, chief executive of Gabelli Asset Management Inc., which manages $28 billion in Rye, New York. "Right now there is a margin of safety in the market."
That's super, Mario. What a friggin' game, a deadly game, as people in places like the Democratic Republic of Congo understand. I take that back. They don't understand what a "margin of safety" is. That resources-rich country (formerly Zaire) has been looted for more than a century by Western business, and right now 30,000 Congolese are dying each month from the ravages and aftershocks of warfare that has killed 3.5 million since 1998.
Yes, I know that mentioning the continuing DRC tragedy seems as if I'm throwing in a non sequitur. I don't think so. I'm interested in how tragedies affect the markets, because it's the rich people in the world who mainly determine the quality and scope of the tragedies that happen to the rest of us.
It's terrible that those people—so far, a total of 37—died in London today. But there are other kinds of terror and other deaths happening in other parts of the world. And Western governments and corporations—more and more these days, that's one and the same—have done little to stop the slaughter in the DRC. In fact, the greed of Westerners has kept most of the continent destabilized. But, see, that's great for the financial markets, because the plundering by Western firms has gone on unabated and unchallenged for so long and oil firms, among others, are continuing to extract huge profits from the continent. Don't upset that apple cart. Hence, what's known in only some quarters as the African World War.
If George W. Bush actually does follow through on his pledge to end cotton subsidies—don't count on it—the financial markets will plunge, because some Western companies will suffer.
But I wish the financial markets would careen in response to the deaths in Africa. That would mean more to poor people everywhere than all of the Live 8 concerts put together.
For now, let's give thanks to that approaching storm in the Gulf of Mexico that helped restore sanity to Wall Street. And helped drive someone else on Wall Street nuts. After all, not everyone sells short.
Not that there won't be a lingering impact on the markets from the London deaths. As Bloomberg's mid-afternoon report noted:
- The U.S. raised the terror threat level for public transit systems nationwide. The Nasdaq Stock Market Inc. said it will observe a moment of silence tomorrow at 11:00 a.m. in New York for the victims.
So, all you Nasdaq workers, be sure to leave the house early tomorrow so you can get to work on time to observe the moment of silence.
You can also chew over the markets' past reactions to tragedies. Here are some historical comparisons, also from the mid-afternoon Bloomberg story:
The S&P 500 dropped 1.5 percent on March 11, 2004, the day synchronized bombs killed more than 190 people in Madrid, and recovered most of that loss the next day. The index rebounded within three weeks after its 14 percent plunge in the first week of trading after the Sept. 11 attacks.
U.S. stock markets have bounced back quickly from terrorist attacks outside of the U.S., according to Tobias Levkovich, chief U.S. equity strategist at Smith Barney in New York.
"Major attacks on non-U.S. targets have had remarkably little impact on U.S. markets, despite their horrific consequences," Levkovich wrote in a note.
Today's deaths in the DRC, meanwhile, are thought to have had absolutely no impact on the financial markets. So who cares?
Get the This Week's Top Stories Newsletter
Every week we collect the latest news, music and arts stories — along with film and food reviews and the best things to do this week — so that you’ll never miss Village Voice's biggest stories.